Pakistan Strategy: Risk appetite, not fundamentals driving performance,
- Confronting a slew of macro, peripheral and political shocks to continue its climb, the KSE-100 index has risen 4% during the last five trading sessions taking returns from Aug’16 (CYTD low) onward to 24%
- Isolating sectoral performance CYTD we highlight the role of side-stocks and sectoral plays in driving market performance, where further comparison to CYTD market low (Aug 16th) highlights the role played by off-board sectors (Refinery/Transport/Sugar were up 50/32/15%) favored by retail investors, where improved risk appetite played a greater role than improved fundamentals
- Conducive policy shift to favor growth including conciliations for axle-load and CNIC on large transactions, recovering macro indicators and supportive policy guidance reinforced by debt markets, where we opine that these factors have over-powered noise emanating from political avenues or any deletions from MSCI in the small-cap index
- From a fund flow perspective, the market could continue to gain momentum given potential flows from / lower redemptions in equity centered mutual funds, where reversing the CYTD net sell trends from Mutual funds (US$200.4mn) and Insurance companies (US$58.6mn) remain crucial to re-invigorate large cap performance
- We advise investors to build positions in E&Ps (on privatization), Power, Banks (possible diversion of flows from cyclicals) and selected OMCs (developments surrounding circular debt resolution) while we have cautious stance on cyclicals (particularly in construction plays with winter down season eminent)
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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